Q3: (a) Ataslink Bhd signed an agreement with Joneslee Ltd, a Korean company, for the construction of a building in Kuala Lumpur. Joneslee set up a project management office in Kuala Lumpur. The total value of the contract is RM7 million of which RM3 million is the service portion and RM4 million is the cost of materials.

Required:

Explain the withholding tax obligation of Ataslink Bhd under Section 107A of the ITA 1967 with regards to these payments and determine the amount to be withheld.

(b) For the purposes of the construction project, Joneslee paid RM200,000 to another Korean company for the hire of equipment.

Required:

State whether or not this payment has Malaysian tax implications and if so, what they are.